CHAPTER 12 WHEN IS A LIMITED TITLE REVIEW SUFFICIENT?

• Jurisdiction: United States

Land and Permitting II
(Jan 1996)
CHAPTER 12
WHEN IS A LIMITED TITLE REVIEW SUFFICIENT?
John R. Hazlett
Whiting Petroleum Corporation
Denver, Colorado

The criteria that management uses in making the decision "what to do about title" very often will not be found in the company's policy and procedures manual. Management more often than not makes this decision, with the advise of its attorney, based on the requirements of the project. Contractual requirements, company policy, purpose, risk and cost all impact the decision.

This paper shall attempt to explain how the manager (whether he or she is an attorney, landman, accountant or engineer) responsible for managing and implementing the company's title policies and the risks associated with those decisions are handled. This paper is not intended to be a scholarly treatise since very few articles have been written on this subject. I have tried to present this paper from a managers viewpoint rather than a legal paper.

I. Introduction.

The preferred method to order a title examination on a tract of land would be to order certified abstracts of title from inception and hire an attorney to prepare a title opinion covering the surface and mineral estate using the title standards recommended in that county, parish or state where the property is located. Unfortunately unless your are preparing a division order title opinion, the expense of conducting an examination of this type can be very costly and time consuming. The land and legal professions have adopted several methods to examine title taking into consideration the risk of loss of title and maintaining title costs to an acceptable level. Management reviews the project, its size, complexity, present value and capital to be invested in the future and agrees on a plan for title examination. Attorneys, Landman or Abstractors are hired and the project is on its way.

What are the various different types of transactions that require different methods of title examination? We immediately think of the Exploration, Development and Acquisitions as situations requiring title. Mergers, corporate buyouts and partnership consolidations may require various levels of title work before consummation. Financing a transaction will also add additional requirements to the task at hand. Unitization, pooling and working interest units are formed every day in the oil and gas business and require some form of title work. The decision that management makes in examining title usually requires the assumption of certain risks. I will try to identify some of the obvious and not so obvious problems that await you.

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II. Exploration Lease Play.

The exploration land play...